We audited the State of Vermont, Department of Housing and Community Development’s disaster recovery programs. We initiated this audit because of the significant funding awarded and the Boston Office of Community Planning and Development’s concerns about the State’s capacity to administer this funding. Our audit objective was to determine whether the State administered its disaster recovery programs effectively and efficiently in accordance with applicable regulations; specifically, whether the State had (1) the capacity to administer its disaster programs, (2) established and implemented controls to ensure that program activities were adequately documented and administered, and (3) expended funds for eligible activities.
The State expended funds for eligible activities; however, it did not always administer its Community Development Block Grant Disaster Recovery programs (CDBG-DR1 and -DR2) effectively and efficiently in accordance with all program requirements. Specifically, it did not (1) have the staffing capacity to administer its disaster recovery programs in accordance with all program requirements, (2) submit all quarterly performance reports in a timely manner, (3) perform adequate monitoring or oversight of funded activities, (4) follow HUD requirements regarding substantial and nonsubstantial amendments to action plans, and (5) correct discrepancies contained in quarterly progress reports submitted by subrecipients. This condition occurred because the State relied on its existing staff for oversight of CDBG-DR1 program activities and failed to hire sufficient staff to oversee both the CDBG-DR1 and -DR2 programs. As a result, there is a risk that the program mission will not be accomplished and that obligated CDBG-DR2 funding of $13.2 million will not be expended by the deadline of December 10, 2015. In addition, HUD lacked assurance that the State and its subrecipients complied with laws, regulations, grant agreements, and program requirements.
We recommend that the U.S. Department of Housing and Urban Development (HUD) require the State to determine the portion of the $13.2 million in disaster recovery funds that it believes will not be expended by the December 10, 2015, deadline and request a waiver from HUD for an extension, and hire additional staff sufficient to ensure its disaster recovery programs are administered effectively.